I have to admit that I was a little freaked out at the seminar on the loan modification business that I attended last Friday. We were walked through the new revisions to the foreclosure rescue statute in Florida (501.1377) that pertains to loan modification and foreclosure rescue services.
Did you know that Florida loan modification agents (not attorneys) cannot charge "up-front" for any loss mitigation services as of July 1? And, after January 1, the law changes again to protect the Florida homeowner even more - foreclosure rescue consultants in Florida will not be able to charge anything until the homeowner receives a material benefit; in other words, is approved for a loan modification or some other loss mitigation solution.
Since that process can take months, it's a big gamble for any loan mod agent to take for months of work without being able to cover his or her costs with a nominal application fee. Attorneys will be similarly restricted. I don't know any attorneys who would work for free.
I predict a lot of loan mod agents will either break the new law on a daily basis or decide that they can't make a living under the new structure here in Florida. I also predict a heavy lobbying effort by attorneys and mortgage brokers to have this line-item vetoed by Governor Christ.
I have not looked closely at other states' laws but my understanding that, with the exception of California, most states have not gone this "hard-core" in this direction yet. Stay tuned.
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Everyone I've talked to in Illinois has moved ahead with the assumption that up-front fees are prohibited, regardless of who is doing the loan mod. A couple guys I know market this as an advantage (No Down Loan Mods). Another takes a deposit in escrow managed by an independent third party attorney (Mortgage Mitigators). Without a national standard, it's a very fluid and unpredictable environment.
ReplyDeleteI agree. I think the escrow idea is bullsh-t since most laws are moving to a standard along the lines of disallowing direct OR INDIRECT up-front payment. Escrow deposits, even taking down credit card info with the intent of charging later...it's all indirect and gonna be banned.
ReplyDelete- Andy
Maryland's law is the same as Florida, that's why I can't see why anyone would want to do this biz. Andy, of you can figure out how to work with these laws and get paid, please advise.
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